<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarter ended May 31, 1999
Commission file number 333-53211
Hard Rock Hotel, Inc.
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(Exact name of registrant as specified in its charter)
California 88-0306263
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4455 Paradise Road, Las Vegas NV 89109
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 693-5000
Common Stock outstanding by class as of May 31, 1999
Common Stock shares
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Class A Common Stock 12,000
Class B Common Stock 64,023
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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<PAGE>
HARD ROCK HOTEL, INC.
INDEX
Part I: Financial Information
Item 1: Financial Statements
<TABLE>
<CAPTION>
<S> <C> <C>
Balance Sheets as of November 30, 1998 and May 31, 1999 (unaudited). . . . . . 1
Unaudited Statements of Operations for the three-months and six-months ended
May 31, 1998 and 1999. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Unaudited Statements of Cash Flows for the six-months ended May 31,
1998 and 1999. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Notes to Condensed Financial Statements. . . . . . . . . . . . . . . . . . . . 4
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 3: Quantitative and Qualitative Disclosures about Market Risks - Not Applicable
Part II: Other Information
Item 1: Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Item 6: Exhibits and Reports on Form 8-k . . . . . . . . . . . . . . . . . . . . . . .10
(a) Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
(b) Reports on Form 8-k
None
</TABLE>
<PAGE>
ITEM 1: FINANCIAL STATEMENTS
HARD ROCK HOTEL, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
November 30, 1998 May 31, 1999
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,567,535 $ 4,604,213
Accounts receivable, net of allowance for doubtful accounts of
$200,000 at November 30, 1998 and $201,000 at May 31, 1999 3,274,644 4,039,580
Income tax refund receivable 194,237 -
Inventories 1,208,126 1,509,491
Prepaid and other current assets 1,480,469 1,379,161
Deferred income taxes 764,740 764,740
Total Current Assets 11,489,751 12,297,185
Property and equipment, net, at cost 123,884,994 186,202,630
Other assets, including pre-opening costs of $843,000 at
November 30, 1998 7,018,798 6,010,948
Deferred income taxes 2,728,603 2,728,603
Total Assets $ 145,122,146 $ 207,239,366
------------- -------------
------------- -------------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable 2,738,194 3,299,718
Construction related payables 13,000,218 21,943,030
Accrued expenses 4,473,594 5,042,007
Interest payable 1,984,543 2,562,354
Current obligations under capital leases 105,861 104,497
Total current liabilities $ 22,302,410 $ 32,951,606
Deferred income taxes 3,493,343 3,493,343
Obligations under capital leases 93,452 39,132
Long-term debt due after one year 130,500,000 185,500,000
Commitments and contingencies - -
Redeemable common stock, no par value 325,000 475,000
Shareholders' deficit:
Common stock, Class A voting, no par value:
Authorized shares -- 40,000
Issued and outstanding shares -- 12,000 - -
Common stock, Class B non-voting, no par value:
Authorized shares -- 160,000
Issued and outstanding shares -- 64,023 - -
Paid-in capital 7,508,250 7,508,250
Accumulated deficit (19,100,309) (22,727,965)
Total shareholders' deficit (11,592,059) (15,219,715)
Total liabilities and shareholders' deficit $ 145,122,146 $ 207,239,366
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</TABLE>
See accompanying notes.
1
<PAGE>
HARD ROCK HOTEL, INC.
UNAUDITED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months ended May 31, Six months ended May 31,
------------------------------ --------------------------------
1998 1999 1998 1999
<S> <C> <C> <C> <C>
REVENUES:
Casino $ 9,719,546 $ 9,266,215 $ 19,781,645 $ 17,731,932
Lodging 3,486,893 4,176,771 6,580,358 7,117,039
Food and beverage 5,031,384 5,272,672 9,271,376 9,435,071
Retail 3,160,342 3,058,990 6,407,309 5,938,208
Other income 670,907 714,110 1,170,442 1,193,720
22,069,072 22,488,758 43,211,130 41,415,970
Less complimentaries (1,533,934) (1,719,818) (3,208,252) (3,226,387)
Net Revenues 20,535,138 20,768,940 40,002,878 38,189,583
Costs and expenses:
Casino 4,897,276 4,937,302 9,747,585 9,610,496
Lodging 1,060,432 1,152,711 1,968,477 2,100,591
Food and beverage 2,884,458 3,337,460 5,412,087 6,035,963
Retail 1,481,094 1,404,455 3,019,824 2,721,081
Other 256,449 347,032 436,149 561,364
Marketing 690,581 514,675 2,646,121 1,123,664
General and administrative 3,321,786 3,486,747 6,426,317 6,717,022
Depreciation and amortization 1,409,593 1,584,709 2,805,410 3,164,441
Pre-opening - 4,512,849 - 4,512,849
Total costs and expenses 16,001,669 21,277,940 32,461,970 36,547,471
Income(loss) from operations 4,533,469 (509,000) 7,540,908 1,642,112
Interest and other:
Interest expense, net (2,672,370) (2,675,604) (5,216,838) (5,247,873)
Other expenses, net - (21,895) - (21,895)
(2,672,370) (2,697,499) (5,216,838) (5,269,768)
Income(loss) before extraordinary loss and
provision for income taxes 1,861,099 (3,206,499) 2,324,070 (3,627,656)
Income tax provision (670,000) - (836,000) -
Income(loss) before extraordinary loss 1,191,099 (3,206,499) 1,488,070 (3,627,656)
Extraordinary loss-early extinguishment
of debt - net of taxes (2,210,777) - (2,210,777) -
Net loss $(1,019,678) $(3,206,499) $ (722,707) $ (3,627,656)
------------------------------------------------------------------
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Net loss per share $ (13.41) $ (42.18) $ (9.51) $ (47.72)
------------------------------------------------------------------
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Shares used in per share calculation 76,023 76,023 76,023 76,023
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</TABLE>
See accompanying notes.
2
<PAGE>
HARD ROCK HOTEL, INC.
UNAUDITED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six months ended May 31,
------------------------
1998 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (722,707) $ (3,627,656)
Adjustmets to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 2,805,410 3,164,441
Amortization of loan fees and organizational costs 272,634 419,784
Issuance of common stock as compensation 150,000 150,000
Early extinguishment of debt 3,495,777 -
Changes in operating assets and liabilities:
Accounts receivable (404,053) (764,936)
Income tax refund receivable (449,000) 194,237
Inventories 39,346 (301,365)
Prepaid and other current assets (726,791) 101,308
Accounts payable (1,716,254) 561,524
Income tax payable - -
Interest payable 2,081,166 577,811
Accrued expenses 353,004 568,413
Net cash provided by operating activities 5,178,532 1,043,561
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (6,016,859) (65,482,077)
Construction related payables, net - 8,942,812
Change in advances due to related parties (470,234) -
Decrease in other assets 87,004 588,066
Net cash used in investing activities (6,400,089) (55,951,199)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of debt 120,000,000 55,000,000
Incurrence of loan fees on Prior Credit Facility (5,389,680) -
Principal payments on long-term debt (105,700,000) -
Payments on capital lease obligations (50,423) (55,684)
Net cash provided by financing activities 8,859,897 54,944,316
Net increase in cash and cash equivalents 7,638,340 36,678
Cash and cash equivalents at beginning of period 4,214,081 4,567,535
Cash and cash equivalents at end of period $ 11,852,421 $ 4,604,213
-------------------------------
-------------------------------
</TABLE>
3
<PAGE>
HARD ROCK HOTEL, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
MAY 31, 1999
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements of Hard Rock Hotel, Inc.
(the "Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been
included. Operating results for the three-month and six-month periods ended
May 31, 1999 are not necessarily indicative of the results that may be
expected for the year ending November 30, 1999. The unaudited interim
financial statements contained herein should be read in conjunction with
the audited financial statements and footnotes for the year ended November
30, 1998.
2. THE EXPANDED FACILITY
In connection with the expansion of the Company's facilities, the Company
incurred approximately $100.0 million of capital expenditures through
May 31, 1999. The Company completed the expansion, and the expanded
facilities opened in May 1999. Capitalized interest of approximately
$3.1 million is included in this amount.
3. LONG TERM DEBT
At May 31, 1999, the Company had $120.0 million outstanding in Senior
Subordinated Notes and $65.5 million outstanding on a $77.0 million
revolving credit line, which line was increased from $67.0 million at
February 28, 1999. Borrowings against the line of credit may require
repayments beginning in February 2000.
4. PRE-OPENING EXPENSES
The Company incurred $4.5 million in pre-opening expenses associated
with the expansion. The Company wrote these charges off when the
facility opened in May 1999.
4
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with, and is qualified in
its entirety by, the company's financial statements, including the notes
thereto, and the other financial information appearing elsewhere herein and by
the audited financial statements and footnotes for the year ended November 30,
1998, which may be obtained upon request from the company.
OVERVIEW
Hard Rock Hotel, Inc.'s (the "Company") sole business is the operation of the
Hard Rock Hotel and Casino in Las Vegas, Nevada (the "Resort"), which commenced
operations on March 9, 1995.
During the month of May 1999, the Company completed construction on a $100
million expansion of the Resort (the "Expansion"). The Expansion included 318
additional rooms, 4 new restaurants, 6,000 square feet of ballroom/banquet
facilities, new retail space, an 8,000 square foot spa/salon/fitness center and
a significantly enlarged swimming pool area ("Beach Club") featuring, among
other things, swim-up blackjack. Although the Company attempted to minimize
disruption caused by the Expansion, management believes net revenues and
operating income for the second quarter of fiscal year 1999 were negatively
affected by the Expansion, resulting in lower results than the Company achieved
for the same period in fiscal year 1998.
YEAR 2000 ISSUES
The "Year 2000 Issue" is the result of computer programs being designed using
two digits rather than four to define the applicable year. Any of the Company's
computer programs or hardware that are date sensitive may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including among
other things a temporary inability to process transactions.
STATE OF READINESS
As part of the buyout of Harveys Casino Resorts' 40% share of the Company, in
October 1997, the Company was required to or did replace most of its hardware
and software including the three most critical systems:
- the property management system which is used in the hotel to check
guests in and out,
- the casino system which is used to control and account for table
games, slots and the casino cage, and
- the back office systems used for accounting, payroll and inventory
control.
During this process, management ensured all the purchased hardware and software
related to these systems will not suffer Year 2000 Issue related malfunctions.
The Company has verified that its remaining information technology systems and
other relevant systems will function properly during and after the year 2000 by:
- identifying all systems or equipment potentially impacted by the Year
2000,
- testing/certifying those systems' ability to operate in a post-1999
environment and
- reprograming or replacing systems or equipment that might have
malfunctioned due to the Year 2000 Issue.
The Company inventoried substantially all of its information technology systems
and other relevant systems. The results of this process indicate that the year
2000 should not materially affect the Company's information technology systems
and other relevant systems. The remaining steps in the Company's plan for the
year 2000 include continued testing of selected systems/equipment to ensure that
the remediation is successful.
5
<PAGE>
Management believes that the cost of its Year 2000 identification, testing and
remediation will not have a material impact on the Company's financial
statements.
The Company is in the process of mailing letters to its significant vendors and
service providers to determine the extent Year 2000 will have on their ability
to continue to supply the Company with goods and services. Based on the goods
(primarily food, beverage and retail items) purchased by the Company, the
Company does not expect Year 2000 to have a material impact on its vendors.
Completion of verifying vendor readiness is proceeding.
RISK AND CONTINGENCY PLAN
Management of the Company believes it has an effective program in place to
resolve the Year 2000 Issue in a timely manner. As noted above, the Company
has not completed all necessary phases of its plans for Year 2000. The most
likely worst case scenarios would include failure of a computer system or
equipment resulting in termination of or diminished service to customers. If
the Company's vendors or suppliers of the Company's necessary power, gas,
water, and telecommunications services fail, the Company would be unable to
provide certain services to its customers. In addition, disruptions in the
economy generally resulting from Year 2000 issues could materially and
adversely affect the Company.
The Company maintains contingency plans in its normal course of business
designed to be deployed in the event of various potential business
interruptions. These generally include manual workarounds and adjusting
staffing. The Company currently has no contingency plans in place should it fail
to complete all phases of its program for addressing the Year 2000 Issue. The
Company plans to evaluate the status of its program for addressing the Year 2000
Issue in mid-1999 and to determine at that time whether a more concrete
contingency plan is necessary.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements herein constitute "forward-looking statements." Such
forward-looking statements include the discussions of the business strategies of
the Company and expectations concerning future operations, margins,
profitability, liquidity, capital expenditures and capital resources. Although
management believes that the expectations in such forward-looking statements are
reasonable, it can give no assurance that any forward-looking statements will
prove to be correct. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors, which may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the risks
associated with new construction, competition and other planned construction in
Las Vegas, government regulation related to the gaming industry, uncertainty of
casino customer spending and vacationing in casino resorts in Las Vegas,
occupancy rates and average room rates in Las Vegas, the popularity of Las Vegas
as a convention and trade show destination, the completion of infrastructure
improvements in Las Vegas, and general economic and business conditions that may
affect levels of disposable income and pricing of hotel rooms. For more
information regarding risks inherent in an investment in the Company, see the
section "Business - Rick Factors" in our annual Report on Form 10-K filed on
February 26, 1999.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MAY 31, 1999 AND 1998
NET REVENUES AND OPERATING INCOME. Net revenues increased 1.1% for the three
months ended May 31, 1999 to $20.8 million compared to $20.5 million for the
corresponding period of the prior year. The increase in revenues is primarily
attributable to increased hotel revenue of $0.7 million, or 19.8% related to 21
days of revenue from the
6
<PAGE>
additional rooms brought about by the Expansion. Operating income decreased
111.2% for the three months ended May 31, 1999 to an operating loss of $0.5
million compared to an operating profit of $4.5 million for the corresponding
period of the prior year, primarily as a result of the write off of $4.5 million
in pre-opening expenses.
CASINO. Casino revenues decreased 4.7% for the three months ended May 31,
1999 to $9.3 million compared to $9.7 million for the corresponding period of
the prior year. The decrease is primarily due to decreased slot revenue of
$0.6 million to $3.6 million compared to $4.2 million for the corresponding
period of the prior year, offset by increased table games revenue of $0.2
million to $5.7 million compared to $5.5 million for the corresponding period
of the prior year. Slot coin in decreased 8.9% to $65.7 million compared to
$72.1 million for the corresponding period of the prior year. Management
believes the opening of new casinos in Las Vegas coupled with the
construction disruption and lack of amenities (primarily restaurants) prior
to the Expansion resulted in less slot play. Conversely, table games drop
increased 25.2% to $42.9 million compared to $34.3 million for the
corresponding period in the prior year due to the increase in the number of
table games. Table games hold percentage decreased to 13.3% compared to
16.2% in the corresponding period of the prior year. Table games revenue
increased 2.7%, as a result of the increase in the number of table games and
the decrease in the hold percentage. Casino departmental income decreased
10.2% for the three months ended May 31, 1999 to $4.3 million from $4.8
million, primarily as a result of the decreased revenues. Casino departmental
income as a percentage of casino revenues decreased to 46.7% in 1999 from
49.6% in 1998, primarily as a result of the decreased revenues.
LODGING. Lodging revenues increased 19.8% for the three months ended May 31,
1999 to $4.2 million from $3.5 million for the corresponding period of the prior
year. The increase is primarily attributed to revenue generated from the
additional 318 hotel rooms, which were open from May 10, 1999 through the end of
the quarter. The ADR for the three months ended May 31, 1999 was $105.80, up
1.7% from $104.04 for the corresponding period of the prior year. Hotel
occupancy was 95.6%, down from 100%. Lodging departmental income increased 24.6%
for the three months ended May 31, 1999 to $3.0 million from $2.4 million,
primarily as a result of the increased revenues. Lodging departmental income as
a percentage of Lodging revenues increased to 72.4% in 1999 from 69.6% in 1998.
FOOD AND BEVERAGE. Food and Beverage revenues increased 4.8% for the three
months ended May 31, 1999 to $5.3 million from $5.0 million for the
corresponding period of the prior year. The increase was related to revenues
from the new restaurants which opened during May 1999 as a result of the
Expansion. Food and Beverage departmental income decreased 9.9% for the three
months ended May 31, 1999 to $1.9 million from $2.1 million, as a result of
increased costs associated with operating the new restaurants coupled with a
decrease in higher margin banquet business. Food and Beverage departmental
income as a percentage of revenues dropped to 36.7% in 1999 from 42.7% in
1998, primarily as a result of the higher operating costs.
RETAIL. Retail revenues decreased 3.2% for the three months ended May 31,
1999 to $3.1 million from $3.2 million for the corresponding period of the
prior year. Management believes the decrease is primarily attributable to a
diluted retail market from increased retail competition coupled with the
construction disruption. Retail departmental income decreased 1.5% for the
three months ended May 31, 1999 to $1.65 million from $1.68 million, as a
result of the decreased revenues. Retail departmental income as a percentage
of Retail revenues increased slightly to 54.1% in 1999 from 53.1% in 1998, as
a result of managing retail expenses to the reduction in revenues.
MARKETING, GENERAL AND ADMINISTRATIVE. Marketing, General and Administrative
expenses remained at $4.0 million for the three months ended May 31, 1999.
DEPRECIATION AND AMORTIZATION. Depreciation and Amortization expense increased
to $1.6 million for the three months ended May 31, 1999 from $1.4 million for
the corresponding period of the prior year.
PRE-OPENING EXPENSE. The Company recorded a pre-opening expense of $4.5 million
associated with the opening of the Expansion.
NET INTEREST EXPENSE. Net Interest Expense remained at $2.7 million for the
three months ended May 31, 1999.
7
<PAGE>
INCOME TAXES. No income tax benefit was recorded in the quarter ended May 31,
1999, as a valuation allowance has been established due to the Company's
accumulated losses.
EXTRAORDINARY LOSS. In connection with securing expansion financing on March 23,
1998, the Company wrote off $3.5 million in unamortized loan fee costs
associated with the retirement of the Prior Credit Facility for the quarter
ended May 31, 1998.
NET INCOME. As a result of the factors described above, the Company recorded a
net loss for the three months ended May 31, 1999 of $3.2 million compared to a
net loss of $1.0 million for the corresponding period of the prior year.
SIX MONTHS ENDED MAY 31, 1999 AND 1998
NET REVENUES AND OPERATING INCOME. Net revenues decreased 4.5% for the six
months ended May 31, 1999 to $38.2 million compared to $40.0 million for the
corresponding period of the prior year. The decrease in revenues is primarily
attributable to decreased casino revenue of 10.4% and decreased retail
revenue of 7.3%. Operating income decreased 78.2% for the six months ended
May 31, 1999 to $1.6 million compared to $7.5 million for the corresponding
period of the prior year, primarily as a result of the write off of $4.5
million in pre-opening expenses and the decreased revenues.
CASINO. Casino revenues decreased 10.4% for the six months ended May 31, 1999 to
$17.7 million compared to $19.8 million for the corresponding period of the
prior year. The decrease is primarily due to decreased table game revenue to
$11.1 million from $11.8 million and decreased slot revenue to $6.4 million
compared to $7.6 million for the corresponding period of the prior year. Table
games revenue decreased directly as a result of lower hold percentage of 13.9%
compared to 17.2% in the corresponding period of the prior year. Table games
drop increased 15.5% to $79.4 million compared to $68.7 million for the
corresponding period in the prior year due to the increase in the number of
table games. Management believes slot revenues decreased as a result of the
opening of new casinos in Las Vegas coupled with the construction disruption and
lack of amenities (primarily restaurants) prior to the Expansion. Casino
departmental income decreased 19.1% for the six months ended May 31, 1999 to
$8.1 million from $10.0 million, primarily as a result of the decreased
revenues. Casino departmental income as a percentage of casino revenues
decreased to 45.8% in 1999 from 50.7% in 1998, primarily as a result of the
decreased revenues.
LODGING. Lodging revenues increased 8.2% for the six months ended May 31, 1999
to $7.1 million from $6.6 million for the corresponding period of the prior
year. The increase is primarily attributed to revenue generated from the
additional 318 hotel rooms which were open from May 10, 1999 through the end of
the period. The ADR for the six months ended May 31, 1999 was $100.56, up 1.7%
from $98.87 for the corresponding period of the prior year. Hotel occupancy was
95.2%, down from 100%. Lodging departmental income increased 8.8% for the six
months ended May 31, 1999 to $5.0 million from $4.6 million primarily as a
result of the increased revenues. Lodging departmental income as a percentage of
Lodging revenues increased to 70.5% in 1999 from 70.1% in 1998.
FOOD AND BEVERAGE. Food and Beverage revenues increased 1.8% for the six
months ended May 31, 1999 to $9.4 million from $9.3 million for the
corresponding period of the prior year. The increase was related to revenues
from the new restaurants which opened during May 1999. Food and Beverage
departmental income decreased 11.9% for the six months ended May 31, 1999 to
$3.4 million from $3.9 million, as a result of increased costs associated
with operating the new restaurants coupled with a decrease in higher margin
banquet business. Food and Beverage departmental income as a percentage of
revenues dropped to 36.0% in 1999 from 41.6% in 1998, primarily as a result
of the increased operating costs.
8
<PAGE>
RETAIL. Retail revenues decreased 7.3% for the six months ended May 31, 1999
to $5.9 million from $6.4 million for the corresponding period of the prior
year. Management believes the decrease is primarily attributable to a diluted
retail market from increased retail competition coupled with the construction
disruption. Retail departmental income decreased 5.0% for the six months
ended May 31, 1999 to $3.2 million from $3.4 million, as a result of the
decreased revenues. Retail departmental income as a percentage of Retail
revenues increased slightly to 54.2% in 1999 from 52.9% in 1998, as a result
of managing retail expenses to the reduction in revenues.
MARKETING, GENERAL AND ADMINISTRATIVE. Marketing, General and Administrative
expenses decreased 13.6% for the six months ended May 31, 1999 to $7.8 million
from $9.2 million for the corresponding period of the prior year. The decrease
is primarily attributable to the costs associated with hosting The Rolling
Stones event of approximately $1.1 million during the first quarter of 1998.
DEPRECIATION AND AMORTIZATION. Depreciation and Amortization expense increased
to $3.2 million for the six months ended May 31, 1999 from $2.8 million for the
corresponding period of the prior year.
PRE-OPENING EXPENSE. The Company recorded a pre-opening expense of $4.5 million
associated with the opening of the Expansion during the second quarter of 1999.
NET INTEREST EXPENSE. Net Interest Expense remained at $5.2 million for the six
months ended May 31, 1999.
INCOME TAXES. No income tax benefit was recorded in the quarter ended May 31,
1999, as a valuation allowance has been established due to the Company's
accumulated losses.
EXTRAORDINARY LOSS. In connection with securing expansion financing on March 23,
1998, the Company wrote off $3.5 million in unamortized loan fee costs
associated with the retirement of the Prior Credit Facility for the quarter
ended May 31, 1998.
NET INCOME. As a result of the factors described above, the Company recorded a
net loss for the six months ended May 31, 1999 of $3.6 million compared to net
loss of $0.7 million for the corresponding period of the prior year.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended May 31, 1999, the Company's principal source of
funds was net financing activities of approximately $55.0 million. The
primary use of funds was the payment of expansion and maintenance capital
expenditures of $56.5 million. As of May 31, 1999 the Company had cash and
cash equivalents of $4.6 million. The Company believes that its current cash
balances, funds available ($11.5 million) under the $77.0 million New Credit
Facility, cash flow from operations, and other sources of cash will be
sufficient to provide operating liquidity. However, no assurances can be
given with respect to the availability or sufficiency of such amounts.
9
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On January 5, 1998, Hard Rock Cafe International (USA) Inc. (f/k/a Rank
Licensing, Inc.), a subsidiary of Rank International plc, (the "Plaintiff"),
filed an amended complaint in the United States District Court for the
Southern District of New York against Peter A. Morton and the Company. The
Plaintiff contends that the reservation and use by Mr. Morton and the Company
of the internet domain names "hardrock.com" and "hardrockhotel.com" (the
"Domain Names"), and the use of certain marks and logos (the "Logos") in, and
in connection with merchandise offered on, internet websites operated under
the Domain Names, violate terms of certain agreements with Mr. Morton and
Federal and state trademark and unfair competition law. The Plaintiff seeks
an injunction against the use of the Domain Names and the Logos by Mr. Morton
and the Company, an order requiring Mr. Morton and the Company to assign the
Domain Names to the Plaintiff, and over $100 million in damages. During the
course of litigation, Mr. Morton and the Company transferred the domain name
"hardrock.com" to the Plaintiff. On June 1, 1999, the court issued a ruling
that the Company owes no money damages, the Company can continue to use the
domain name "hardrockhotel.com," and that the Company can use the Logos in
connection with merchandising within designated territories if it can
demonstrate to the Court its ability to do so without doing so in restricted
territories. The Company has ceased using the Logos in connection with
internet merchandising while it seeks to have the territorial limitation
removed. Through May 31, 1999, the Company has incurred $1.5 million in legal
fees in defense of this suit which was charged to general and administrative
expenses on the Statement of Operations during fiscal year 1998.
Additionally, the Company is a defendant in various lawsuits relating to
routine matters incidental to its business. Management does not believe that the
outcome of any such litigation, in the aggregate, will have a material adverse
effect on the Company.
ITEM 6. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
3. CERTIFICATE OF INCORPORATION AND BY-LAWS
3.1 Second Amended and Restated Certificate of Incorporation of the
Company. (1)
3.2 Second Amended and Restated By-Laws of the Company. (1)
4. INSTRUMENTS DEFINING THE RIGHT OF SECURITY HOLDERS, INCLUDING
INDENTURES.
4.1 Letter, dated April 8, 1999, from Peter A. Morton, as Completion
Guarantor, to Bank of America National Trust and Savings Association,
as Administrative Agent, and U.S. Bank Trust National Association, as
Trustee.
10. MATERIAL CONTRACTS.
10.1 Amendment No. 2 to Loan Agreement, dated as of April 8, 1999, and
entered into with reference to the Loan Agreement, dated as of March
23, 1998, by and among the Company, as Borrower, the Lenders party
thereto and Bank of America National Trust and Savings Association, as
Agent.
10.2 Amendment No. 1 to Make Well Agreement, dated as of April 8, 1999,
and entered into with
10
<PAGE>
reference to the Make Well Agreement, dated as of March 23, 1998, by
and between Peter A. Morton in favor of Bank of America National Trust
and Savings Association, as Agent, for the benefit of the Lenders
party to the Loan Agreement, dated as of March 23, 1998.
27. FINANCIAL DATA SCHEDULE.
27.1 Financial Data Schedule for three-months and six-months ended May 31,
1998 and 1999.
</TABLE>
(1) Incorporated by reference to designated exhibit to the Company's
Registration Statement on Form S-4, filed with the Securities and Exchange
Commission on May 21, 1998 (File No. 333-53211).
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
This document includes various "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Sections
21E of the Securities Exchange Act of 1934, as amended, which represent the
Company's expectations or beliefs concerning future events. Statements
containing expressions such as "believes," "anticipates" or "expects" used in
the Company's press releases and periodic reports on Forms 10-K and 10-Q filed
with the Securities and Exchange Commission are intended to identify
forward-looking statements. All forward-looking statements involve risks and
uncertainties. Although the Company believes its expectations are based upon
reasonable assumptions within the bounds of its knowledge of its business and
operations, there can be no assurances.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
HARD ROCK HOTEL, INC.
Date: July 15, 1999 By: /s/ GARY SELESNER
-------------------------------------
Gary Selesner
DULY AUTHORIZED OFFICER
/s/ JOSEPH DWYER
-------------------------------------
Joseph Dwyer
CONTROLLER (PRINCIPAL FINANCIAL OFFICER)
12
<PAGE>
EXHIBIT 4.1
April 8, 1999
Bank of America National Trust and Savings Association,
as Administrative Agent
555 South Flower Street, 11th Floor
Los Angeles, California 90071
Attn: Janice Hammond
U.S. Bank Trust National Association
180 East 5th Street
St. Paul, Minnesota 55101
Attn: Corporate Trust Department
To the foregoing parties:
Reference is hereby made to (i) that certain Completion Guaranty (the
"Completion Guaranty") dated as of March 23, 1998 by the undersigned, Peter
A. Morton ("Guarantor"), in favor of (a) Bank of America National Trust and
Savings Association, as Administrative Agent (the "Administrative Agent")
under the Loan Agreement described therein (the "Loan Agreement"), and for
the benefit of the Lenders (the "Lenders") party to such Loan Agreement from
time to time, and (b) U.S. Bank Trust National Association, (formerly, First
Trust National Association), as Trustee (the "Trustee") under the Indenture
described therein for the benefit of the holders from time to time of the
Senior Subordinated Notes referred to therein, and (ii) that certain
Subordination Agreement dated as of March 23, 1998 between Guarantor and the
Administrative Agent (the "Subordination Agreement").
Guarantor has received and reviewed a copy of the proposed Amendment
No. 2 to Loan Agreement pursuant to which Hard Rock Hotel, Inc. (the
"Borrower") has requested (i) that Lenders approve a revised Budget (as
defined in the Loan Agreement) for the Proposed Expansion (as defined in the
Loan Agreement), which revised Budget would reflect an increase in the amount
of the Budget from $87,000,000 to $100,000,000, and (ii) that the Commitment
(as defined in the Loan Agreement) be increased by $10,000,000 to enable
Borrower to finance the requirements of the revised Budget.
Guarantor is familiar with the financing needs of the Proposed Expansion
and consents to the increase in the amount of the Budget from $87,000,000 to
$100,000,000 and to the increase in the amount of the Commitment by
$10,000,000. Guarantor agrees that the principal amount of Guarantor's
liability under the Completion Guaranty, as set forth in Section 3 of the
Completion Guaranty, shall be increased from $10,000,000 to $23,000,000.
Guarantor confirms that Guarantor, in addition to such increase in the
principal amount of
-1-
<PAGE>
Guarantor's liability under the Completion Guaranty, shall remain liable for
interest, costs and expenses as set forth in Section 3 of the Completion
Guaranty as modified by this paragraph. Guarantor further agrees that
notwithstanding anything to the contrary in the Subordination Agreement, the
"Senior Obligations" referred to in the Subordination Agreement shall mean
the Obligations (as defined in the Loan Agreement) in an aggregate amount not
exceeding $77,000,000.
/s/ Peter A. Morton
------------------------------
Peter A. Morton, an individual
By executing this letter in the space provided
below, the Borrower consents to the terms
hereof, and agrees that it shall not take any action
which is in contravention of the terms of this
letter.
HARD ROCK HOTEL, INC.
By: /s/ Peter A. Morton
- -----------------------
Peter A. Morton
Title: President
- -----------------------
By executing this letter in the space provided below,
each of the Administrative Agent and the Trustee
consents to the terms hereof, including the increase of
the Budget.
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Administrative Agent
By: /s/ Janice Hammond
- -----------------------------------
Title: Vice President
- -----------------------------------
U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee
By: /s/ R. Prokosch
- -----------------------------------
Title: Asst. Vice President
- ---------------------------
-2-
<PAGE>
EXHIBIT 10.1
AMENDMENT NO. 2 TO LOAN AGREEMENT
This Amendment No. 2 to Loan Agreement dated as of April 8, 1999,
("Amendment") is entered into with reference to the Loan Agreement dated as of
March 23, 1998, by and among Hard Rock Hotel, Inc., a Nevada corporation
("Borrower"), the Lenders named therein, and Bank of America National Trust and
Savings Association, as Administrative Agent (as amended, the "Loan Agreement").
RECITALS
A. Borrower has requested that Lenders approve a revised Budget (as
defined in the Loan Agreement) for the Proposed Expansion (as defined in the
Loan Agreement), which revised Budget would reflect an increase in the amount of
the Budget from $87,000,000 to $100,000,000.
B. Borrower has requested that the Commitment (as defined in the Loan
Agreement) be increased by $10,000,000 to enable Borrower to finance a portion
of the requirements of the revised Budget.
AGREEMENT
NOW, THEREFORE, the Administrative Agent, acting with the consent of
the Lenders in accordance with the terms of the Loan Agreement, and Borrower
hereby agree as follows:
1. DEFINITIONS. Capitalized terms used herein are used with the meanings
set forth for those terms in the Loan Agreement.
2. SECTION 1.1 - DEFINED TERMS. Section 1.1 is revised as follows:
(a) The definition of "Commitment" is hereby amended to read in full
as follows:
"COMMITMENT" means $77,000,000 or such lesser amount to which the
Commitment may be reduced from time to time pursuant to the terms of
Sections 2.5, 2.6 and 2.7.
-1-
<PAGE>
(b) The definition of "EBITDA" is revised as follows: the reference
in subsection (j) of such definition to "$1,000,000" is revised to read
"$1,600,000".
(c) The definition of "Reduction Amount" set forth in Section 1.1 of
the Loan Agreement is hereby amended to read in full as follows:
"REDUCTION AMOUNT" means, as to each Reduction Date, the amount
set forth opposite that Reduction Date below, or such lesser amount to
which that Reduction Amount may be reduced in accordance with the
second sentence of Section 2.5 or the last sentence of Section 2.7:
<TABLE>
<CAPTION>
Reduction Dates Reduction Amount
--------------- ----------------
<S> <C>
February 29, 2000 $2,475,000
May 31, 2000 $2,475,000
August 31, 2000 $2,475,000
November 30, 2000 $2,475,000
February 28, 2001 $3,762,500
May 31, 2001 $3,762,500
August 31, 2001 $3,762,500
November 30, 2001 $3,762,500
February 28, 2002 $3,762,500
May 31, 2002 $3,762,500
August 31, 2002 $3,762,500
November 30, 2002 $3,762,500
February 28, 2003 $3,762,500
May 31, 2003 $3,762,500
August 31, 2003 $3,762,500
November 30, 2003 $3,762,500
February 29, 2004 $5,485,000
Maturity Date $16,465,000
</TABLE>
-2-
<PAGE>
3. SECTION 6.12 - SENIOR LEVERAGE RATIO. The table set forth in Section
6.12 of the Loan Agreement is amended to read in full as follows:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Maximum Ratio
--------------------- -------------
<S> <C>
11/30/98 2.25:1.00
2/28/99 3.75:1.00
5/31/99 3.85:1.00
8/31/99 3.00:1.00
11/30/99 2.35:1.00
2/29/00 2.25:1.00
5/31/00 2.15:1.00
8/31/00 2.05:1.00
Thereafter 2.00:1.00
</TABLE>
4. SECTION 6.13 - FIXED CHARGE COVERAGE RATIO. Section 6.13 of the Loan
Agreement is revised as follows: the Minimum Ratio required for the Fiscal
Quarter ending May 31, 1999 shall be 1.00:1.00 and not 1.05:1.00.
5. SECTION 6.17 - CONSTRUCTION OF THE PROPOSED EXPANSION.
(a) SECTION 6.17(b). Subsection (ii) of Section 6.17(b) of the Loan
Agreement is amended to read in full as follows: "increase the Budget to more
than $100,000,000".
(b) SECTION 6.17(i). Section 6.17(i) is hereby amended by inserting
the following proviso after the words "Schedule 1.1A": "PROVIDED, HOWEVER, that
this Section 6.17(i) shall not prohibit an increase in the amount of the Budget
to a maximum of $100,000,000".
6. SCHEDULE 1.1C - PRO RATA SHARES OF THE BANKS.
Schedule 1.1C attached to the Loan Agreement is replaced by Schedule 1.1C
attached to this Amendment as Annex 1.
-3-
<PAGE>
7. CONDITIONS PRECEDENT. The effectiveness of this Amendment shall be
conditioned upon the receipt by the Administrative Agent of the following:
(a) counterparts of this Amendment executed by Borrower and the
Administrative Agent, acting on behalf of the Lenders;
(b) written consents to the execution, delivery and performance
hereof from the Lenders;
(c) written consent to the execution, delivery and performance hereof
from Peter A. Morton;
(d) Notes executed by Borrower in favor of the Lenders in principal
amounts reflecting the revised Pro Rata Shares of the Lenders of the
Commitment as set forth on Schedule 1.1C attached to this Amendment as
Annex 1;
(e) the First Amendment to Deed of Trust in the form attached hereto
as Annex 2, executed and acknowledged by Borrower and recorded in the
official records of Clark County, Nevada;
(f) a modification of endorsement to the Deed of Trust concerning
this Amendment, with all costs and expenses of such modification to be paid
by Borrower;
(g) a side letter from Peter A. Morton addressed to Administrative
Agent and First Trust National Association, N.A., as Trustee under the
Indenture, concerning the increase of the Budget amount referred to in this
Amendment and the increase of Peter A. Morton's maximum liability under the
Completion Guaranty by an amount equal to such increase in the Budget
amount and an agreement in writing by the Trustee to such increase;
(h) Amendment No. 1 to Make Well Agreement in the form attached
hereto as Annex 3, executed and acknowledged by Peter A. Morton and
Borrower;
(i) a Certificate, signed by a Senior Officer of Borrower, certifying
that attached thereto are true, correct and complete copies of the revised
Plans and Budget;
(j) evidence acceptable to the Administrative Agent that Commonwealth
Land Title Insurance Company has issued or is prepared to concurrently
issue endorsements to the ALTA policy of title insurance held by the
Administrative Agent increasing the coverage thereunder from $67,000,000 to
$77,000,000 and that Chicago Title Insurance company is prepared to issue
its facultative reinsurance agreement assuming $10,000,000 of secondary
liability with respect thereto;
-4-
<PAGE>
(k) payment to the Administrative Agent of an upfront fee for the
account of each Lender which has agreed to increase its Pro Rata Share of
the Commitment to Borrower in connection with this Amendment, in an amount
equal to, with respect to each such Lender, the increase in such Lender's
Pro Rata Share of the Commitment (as set forth on Schedule 1.1C attached to
this Amendment as Annex 1) TIMES fifty (50) basis points; and
(l) such documentation with respect to Borrower as the Administrative
Agent may require to establish its authority to execute, deliver and
perform this Amendment and the other Loan Documents related to this
Amendment, INCLUDING certified copies of corporate resolutions.
8. REPRESENTATION AND WARRANTY. Borrower represents and warrants to the
Administrative Agent and the Lenders that no Default or Event of Default has
occurred and remains continuing.
9. CONFIRMATION. In all other respects, the terms of the Loan Agreement
and the other Loan Documents are hereby confirmed.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed as of the date first above written.
HARD ROCK HOTEL, INC., a Nevada corporation
By: /s/ Peter Morton
--------------------------------------
Title: PRESIDENT
------------------------------------
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
Administrative Agent
By: /s/ Janice Hammond
---------------------------------------
Janice Hammond, Vice President
-5-
<PAGE>
ANNEX 1 TO AMENDMENT NO. 2
TO LOAN AGREEMENT
Schedule 1.1C
<TABLE>
<CAPTION>
Lender Amount Pro Rata Share
- ------ ------ --------------
<S> <C> <C>
Bank of America National Trust $27,925,373.13 36.26671835%
and Savings Association
Imperial Bank $13,791,044.78 17.91044776%
Wells Fargo Bank, N.A. $13,791,044.78 17.91044776%
Bank of Scotland $11,492,537.31 14.92537313%
PNC Bank, National Association $10,000,000.00 12.98701299%
- --------------------------------------------------------------------------------
Total $77,000,000 100%
</TABLE>
-6-
<PAGE>
CONSENT OF LENDER
This Consent of Lender is delivered with reference to the Loan
Agreement dated as of March 23, 1998, by and among Hard Rock Hotel, Inc., a
Nevada corporation, the Lenders named therein, and Bank of America National
Trust and Savings Association, as Administrative Agent (as amended, the "Loan
Agreement"). Capitalized terms used but not defined herein are used with the
meanings set forth for those terms in the Loan Agreement.
The undersigned Lender hereby consents to the execution, delivery and
performance of the proposed Amendment No. 2 to Loan Agreement by the
Administrative Agent on behalf of the Lenders, substantially in the form
presented to the undersigned as a draft.
- ---------------------------------
[Typed/Printed Name of Lender]
By:
-----------------------------
Title:
--------------------------
Date:
---------------------------
-7-
<PAGE>
CONSENT
This Consent is delivered with reference to the Loan Agreement dated
as of March 23, 1998, by and among Hard Rock Hotel, Inc., a Nevada corporation,
the Lenders named therein, and Bank of America National Trust and Savings
Association, as Administrative Agent (as amended, the "Loan Agreement").
Capitalized terms used but not defined herein are used with the meanings set
forth for those terms in the Loan Agreement.
The undersigned hereby consents to the execution, delivery and
performance of the foregoing Amendment No. 2 to Loan Agreement, and agrees to
take any and all actions necessary or reasonably requested to cause the Borrower
to remain in compliance with the terms thereof.
- -------------------------------
Peter A. Morton, an individual
-8-
<PAGE>
EXHIBIT 10.2
AMENDMENT NO. 1 TO MAKE WELL AGREEMENT
This Amendment No. 1 to Make Well Agreement dated as of April 8, 1999
("Amendment") is entered into with reference to the Make Well Agreement dated as
of March 23, 1998, by and between Peter A. Morton ("Morton") in favor of Bank of
America National Trust and Savings Association, as Administrative Agent (the
"Administrative Agent") under the Loan Agreement described below, and for the
benefit of the Lenders (as defined below) party to such Loan Agreement from time
to time (as amended or otherwise supplemented or modified, the "Make Well
Agreement").
The Administrative Agent, acting with the consent of the Lenders in
accordance with the terms of that certain Loan Agreement dated as of March 23,
1998 among Hard Rock Hotel, Inc., a Nevada corporation (the "Borrower"), the
lenders party thereto (the "Lenders"), and Bank of America National Trust and
Savings Association, as Administrative Agent, and Morton hereby agree to amend
the Make Well Agreement as follows:
1. SECTION 1. The definition of "Release Date" in Section 1 of the Make
Well Agreement is revised as follows: the reference, in each of subsections (a)
and (b) of such definition, to "5.55:1.00" shall refer instead to "5.70:1.00".
2. CONFIRMATION. In all other respects, the terms of the Make Well
Agreement are hereby confirmed.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
/s/ Peter A. Morton
------------------------------
Peter A. Morton, an individual
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS
ASSOCIATION, as Administrative Agent
By: /s/ Janice Hammond
--------------------------------
Janice Hammond, Vice President
By executing this Amendment in the space provided below, the Borrower consents
to the terms hereof, and agrees that it shall not take any action which is in
contravention of the terms of the Make Well Agreement, as amended by this
Amendment.
HARD ROCK HOTEL, INC., a Nevada corporation
By: /s/ Peter A. Morton
-----------------------------------------
Title: PRESIDENT
--------------------------------------
-1-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS 6-MOS 6-MOS
<FISCAL-YEAR-END> NOV-30-1998 NOV-30-1999 NOV-30-1998 NOV-30-1999
<PERIOD-START> MAR-01-1998 MAR-01-1999 DEC-01-1997 DEC-01-1998
<PERIOD-END> MAY-31-1998 MAY-31-1999 MAY-31-1998 MAY-31-1999
<CASH> 11,852 4,604 11,852 4,604
<SECURITIES> 0 0 0 0
<RECEIVABLES> 3,613 4,241 3,613 4,241
<ALLOWANCES> (242) (201) (242) (201)
<INVENTORY> 1,027 1,509 1,027 1,509
<CURRENT-ASSETS> 21,437 12,297 21,437 12,297
<PP&E> 110,247 209,511 110,247 209,510
<DEPRECIATION> (17,267) (23,308) (17,267) (23,308)
<TOTAL-ASSETS> 123,480 207,239 123,480 207,239
<CURRENT-LIABILITIES> 8,186 34,252 8,186 34,252
<BONDS> 120,000 185,500 120,000 185,500
0 0 0 0
0 0 0 0
<COMMON> 0 0 0 0
<OTHER-SE> (8,659) (15,220) (8,659) (15,220)
<TOTAL-LIABILITY-AND-EQUITY> 123,480 207,239 123,480 207,239
<SALES> 0 0 0 0
<TOTAL-REVENUES> 20,535 20,769 40,003 38,190
<CGS> 0 0 0 0
<TOTAL-COSTS> 16,002 21,278 32,462 36,547
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 2,672 2,697 5,217 5,270
<INCOME-PRETAX> 1,861 (3,206) 2,324 (3,628)
<INCOME-TAX> (670) 0 (836) 0
<INCOME-CONTINUING> 1,191 (3,206) 1,488 (3,628)
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 2,211 0 2,211 0
<CHANGES> 0 0 0 0
<NET-INCOME> (1,020) (3,206) (723) (3,628)
<EPS-BASIC> (13.41) (42.18) (9.51) (47.72)
<EPS-DILUTED> 0 0 0 0
</TABLE>
